MF Analysis - are you using OpEx or CapEx for this?

[Bob Landers]

I'm currently pursuing Multifamily deals 10-50 units in size and am curious how others are treating in their own analysis line items that sellers vary in how they are presented. For costs associated with unit rollover like new flooring or dry wall repair, are you placing those in your OpEx (impacting NOI and sale value) or in CapEx (not impacting NOI and sale value). What about one off appliances that fail and are replaced?

[Evan Polaski]

@Bob Landers, this is actually tougher than @Bjorn Ahlblad states. GAAP principles, as I understand them and remember I am not a CPA, would have anything that increases the value of the property is CapEx. So if you replace carpet with the same carpet that would be repair (OpEx). If you change the carpet for hardwoods, you could argue that is CapEx, since typically hardwoods are valued higher in sale than carpet.

Paint, drywall repairs are OpEx.